Orders of the Day — Legal Services

– in the House of Commons at 10:08 pm on 15th May 1995.

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The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor):

I beg to move, That the draft Conditional Fee Agreements Order 1995, which was laid before this House on 20th April, be approved.

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

I understand that with this it will be convenient to discuss the following motion: That the draft Conditional Fee Agreements Regulations 1995, which were laid before this House on 20th April, be approved.

Mr. Taylor:

The order and regulations will bring into force the conditional fee provisions of section 58 of the Courts and Legal Services Act 1990. The scheme will greatly widen access to justice by enabling lawyers to act on a "no win, no fee" basis. To reflect the risk that that entails, lawyers will be able to charge an uplift on their normal fees if the litigation is successful. The Courts and Legal Services Act provides that the Lord Chancellor, after consultation with the designated judges and the profession, should prescribe the types of proceedings in which conditional fee agreements would be allowable, the maximum percentage uplift that would be permitted and any other requirements that he considers necessary. Those matters are set out in the draft order and regulations.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

The Lord Chancellor, with his great expertise in Scottish law, will no doubt have considered the success of similar arrangements that have been available in Scotland for some time. What has been the uptake of those arrangements in Scotland, and how successful have they been?

Mr. Taylor:

I will come back to that matter, but I can say that an uplift of 100 per cent. is exactly what has been allowed since 1992 under the Scottish speculative fee scheme. [Interruption.] I will answer at the end of the debate.

Personal injury litigation would seem particularly well suited to conditional fee agreements because although the uplift or "success fee", as it is often called, is not directly related to the amount of damages recovered, the fact that there will be a monetary award in successful cases will give the litigant the means to pay his lawyer's fees.

In the light of representations made during the consultation exercise to which I have referred, the Lord Chancellor decided to include insolvency proceedings and cases before the European Commission of Human Rights and the European Court of Human Rights. The Lord Chancellor has set the maximum uplift at 100 per cent. That will encourage lawyers to accept cases with a 50:50 chance of success which, if the uplift were lower, they might not be inclined to take. The whole purpose of the new arrangement is to extend access to justice.

I consider that the proposals will prove a valuable addition to the judicial system in this country, and I commend them to the House.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department) 10:10 pm, 15th May 1995

The Minister's failure to respond to the query of my—he is not an hon. Friend yet—the hon. and learned Member for Montgomery (Mr. Carlile) speaks volumes. Was his reticence due to a lack of information on his part? Will it soon be remedied by a flurry of notes and interest from the silent ones, or was it unlikely and, in my respectful submission, unhelpful reticence on the point? Perhaps the response will come any minute now, so I shall of course give way to the hon. Gentleman.

Perhaps the Minister's reticence is due to the fact that in Scotland the self-same regulations—or at least regulations of a sort upon which the measures are based—have not produced any appreciable benefit to the consumer of legal services. It is by those criteria that the Opposition judge the measures. What will be the benefit not to the lawyer but to the consumer of legal services? On that issue, the jury is out.

Mr. Taylor:

Actually, it is not. I have a letter dated 11 May from Meriel Thorne, the parliamentary officer of the Consumers Association. She states: As we made clear in our response to the various consultations from the Lord Chancellor's Department, we warmly support this provision. We support the new arrangements for the improved choice and access to justice they will provide for the large number of people currently prevented from enforcing their legal rights. We welcome"— this is the Consumers Association— the means of support they will offer for those who would otherwise be deterred from pursuing their legal rights by the fear of legal costs.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

I hear a cry of "Withdraw" from the usually silent one, but I have no intention of doing so. I repeat, the jury remains out, and the Minister's attempt to rely on a specious majority verdict with the numbers made up by the National Consumer Council is not going to work.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

I shall give way in a moment, but I fancy that the hon. and learned Gentleman will be making his own contribution in due course.

Why is it that, despite his intervention, the Minister has failed to answer the question asked by the hon. and learned Member for Montgomery?

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

What is the hon. Gentleman doing talking about juries? The order will not apply to jury trials.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

That contribution speaks for itself. Even at this late stage of the evening, one would hope for better from the hon. and learned Gentleman. Still, one lives in hope.

It is not good enough for the Minister to pray in aid the National Consumer Council. He is not alone in having letters from the council—we can all produce and refer to them. The regulations fail to deal with the council's concerns about the particular arrangements for the conditional fees proposed by the Minister and the issue of the 100 per cent. uplift.

The council is not alone in expressing concern about the extent of that uplift. It commends to the Minister that the Law Society should encourage solicitors to put a voluntary cap of 25 per cent. of the total damages as the amount that they take in success fees, even if it is less than the agreed success fee. Is that something which the Minister will join the National Consumer Council and the Opposition

Mr. John M. Taylor:

At least for the correction of Hansard, I repeat that I am reading a letter of unqualified support not from the National Consumer Council, to which the hon. Gentleman refers, but from the Consumers Association. The record should be clear on that.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

I am grateful to the Minister for that because it did surprise me that he should suggest that the consumers spoke with one voice on this issue. He admits by that intervention that the National Consumer Council's doubts about the measures remain, and they remain unanswered by the Minister.

Is the Minister prepared to join the National Consumer Council in calling on the Law Society to encourage solicitors in every way to impose a voluntary cap? Does he think that that is desirable? The Minister remains silent, so we must conclude that he is not prepared to put the authority of his office and that of the Lord Chancellor behind that modest proposal as a way of safeguarding the consumer.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

I am glad to see such a flurry of interest from the Conservatives. It is welcome on a matter of such importance. We all look forward to the speeches that they will no doubt make on the issue.

Will the Minister deal with the following matter on behalf of consumers? In 1994, the National Consumer Council's research into client care found communication about costs—even in ordinary arrangements—to be a problem. About one third of privately paying clients surveyed did not receive adequate information about likely costs. Given the greater potential for misunderstanding between client and solicitor over the highly complicated terms of agreement and the variety of possible outcomes envisaged in these regulations, what steps will the Minister undertake to take, here and now, to ensure that the potential for misunderstandings between solicitors and clients is reduced in that regard, as without that Conservative Members and many others will continue to fear the impact of the arrangements on consumers and on their welfare?

Photo of Mr Spencer Batiste Mr Spencer Batiste , Elmet

I am a little confused by what the hon. Gentleman said. It appeared to be self-contradictory. From his early comments on the Scottish experience, I thought that he was saying that conditional fees should be encouraged, but that they had been relatively unsuccessful in capturing the public imagination in Scotland. Yet, by his subsequent proposal that only a 25 per cent. uplift should be allowed, is he not in effect saying that it is unlikely to be successful anywhere, as few people will be prepared to take the risk at those levels?

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

There is no contradiction. Our concern—it must be one that is shared by all people of good will—is that every effort should be made to encourage and support arrangements that improve and enhance the consumer's access to justice. We take that as read. These proposals have been much vaunted by the right hon. Lord Chancellor and, indeed, by the Minister as an important response to the problem of access to justice.

Photo of Edward Garnier Edward Garnier , Harborough

Will the hon. Gentleman give way?

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

Not at the moment.

The Opposition are pointing out that, in the light of the Scottish experience, it would be wrong for us to see these arrangements as some sort of panacea for the problems that exist in promoting access to justice. Now that the regulations have been laid before the House, our concern is to ensure that every encouragement is given to ensure that they work in the interests of the consumer. Hence the concern about the cap, and a recognition of the role of a voluntary cap in some cases, but also, and importantly, the concern about ensuring that consumers of legal services who enter into such agreements with their solicitors are fully aware of all the implications for their relationship with their solicitor. We regard that as important.

Photo of Edward Garnier Edward Garnier , Harborough

Will the hon. Gentleman give way?

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

No, not at the moment.

We are anxious to receive assurances from the Minister on a further matter—the potential, which the National Consumer Council has pointed out, for solicitors to exaggerate the difficulties of winning to justify a high success fee, even if it is an open and shut case. Where they can, clients must treat conditional fees like any other business transaction and must be in a position to shop around to get the best deal. That is why we urge the Government to ensure that safeguards are in place for the consumer. As the arrangements are put in place for the first time, we also want the Government to keep them under constant review to ensure that consumers get the best possible deal and to avoid some of the potential dangers that have been identified.

It is important that the Government respond to the concerns about the proposals expressed in the other place and elsewhere by the judiciary. The criticisms of Lord Justice Steyn, Lord Ackner and Lord Simon of Glaisedale in particular require the Government's consideration. I would welcome a sign from the Minister that Lord Steyn's urgings that officials in his Department rethink the proposals have had some effect. It would be wrong of the Minister to ignore the concerns expressed by Lord Steyn, not least the warning that, under the present arrangements, litigants might find all their damages swallowed up in increased fees. Lord Steyn's committee said that the risk applies even if those are increased by only 50 per cent. The risk is that much greater if they are increased by 100 per cent.

Photo of Edward Garnier Edward Garnier , Harborough

I am diffident about interrupting the hon. Gentleman because I know that for some years he was a solicitor and for some little while has been a barrister, but will he tell the House what is the Labour party's policy on that measure? Does it support it or not?

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

I had hoped that it would be possible to discuss this measure, raising, as we are bound to raise, the concerns on the part of consumers but, at the same time, not ignoring the importance of exploring, by all reasonable means, the opportunity to give consumers greater access to justice and legal services. I hope that that sets the hon. and learned Gentleman's mind at rest.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

I do not know whether the hon. and learned Gentleman is unduly exercised by the fact that he may be required to wait a little longer to see whether we divide the House on this issue. If that is his concern, as I suspect it may be, I have no intention whatever of putting him out of his misery. He can wait just a little longer.

Photo of Edward Garnier Edward Garnier , Harborough

The hon. Gentleman is frightened.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

I think not.

Our purpose in ensuring that we had a full debate on the issue on the Floor of the House tonight was to seek from the Minister the reassurances that I have outlined. We feel the need to do that given the absence of reassurances so far. When the Lord Chancellor and the Minister were advised about the concerns expressed by the higher judiciary about the proposals, far from saying that they had rethought the scheme, they expressed their determination to persist with it, come what may. That is not the attitude for which we would have hoped from the Minister and the Lord Chancellor. We can only hope that the Minister will be able to offer us some of the reassurances that we seek.

We also seek some assurances about the Law Society's proposals for insurance. It has apparently proposed a scheme under which some clients, but not all, can protect themselves against paying the legal costs of their opponents if they lose. Lord Steyn has said that such a scheme is of great importance, but the Law Society has been singularly unforthcoming in producing the detail about its provisions that one would want. It is by no means clear whether everyone litigating under the no-win, no-fee arrangements would be able to obtain cover.

Has the Minister's Department met representatives of the Law Society to discuss the scheme? What advice has the Law Society been given about the scheme? Will it cover all those who seek to avail themselves of its benefits? Our decision on whether to divide the House on the proposals will depend upon the Minister's responses to those questions. Hope springs eternal—

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

They have all gone home.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

I am surprised at the hon. and learned Gentleman, whom I sought to support in his earlier humble contribution. It just shows that it would be premature to regard him as a friend. I am surprised that he should make such an unkind remark from a sedentary position, suggesting that all my hon. Friends have gone home. That is far from the truth. Not all of them have—

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

Just two others are here.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

My hon. Friend the Member for Great Grimsby (Mr. Mitchell) has done distinguished service on the matter. If pushed, I can assure the Minister and

Conservative Members that my hon. Friends will come out of the woodwork to do their duty by the consumers of legal services.

Photo of Mr Ivan Lawrence Mr Ivan Lawrence , Burton

What normally comes out of the woodwork is sap and creepy-crawlies.

Photo of Mr Paul Boateng Mr Paul Boateng Shadow Minister (Business, Innovation and Skills), Shadow Minister (Lord Chancellor's Department)

We look forward to yet more comments from the hon. and learned Gentleman. I hope that we will be treated to speech from him, because, given his current position, it would be a shame if he did not share his wisdom with a wider audience.

We will determine whether to divide the House once we have heard the Minister's response to our queries.

Photo of Mr Spencer Batiste Mr Spencer Batiste , Elmet 10:32 pm, 15th May 1995

I shall speak briefly, in deference to colleagues and the hour of the night.

Given the potential importance of the subject, it is important that certain things are placed on the record. I speak as a solicitor. Although I have not practised in litigation for many years, I have watched closely developments in the law.

The justice system is currently prone to serious problems, particularly in relation to civil litigation. They relate basically to access to justice and the cost of it. The proposals seek to address those two elements.

The problem that faces most people is that, if they do not qualify for legal aid, they can barely afford litigation. A large proportion of the population is therefore precluded from civil litigation.

There is an even worse injustice. An individual who is sued by a person who has legal aid is in an unenviable position even if he wins. It is often the case that the person being sued—the defendant—is only slightly wealthier than the person who sues him. Those problems must be solved if we are to have a modern justice system.

In the United States, there have been many pitfalls and abuses that do nothing to enhance the United States justice system, but bring it substantially into disrepute. The Government must be congratulated on striking a balance, in the legislation before us, which avoids the pitfalls of the United States and tries to divine the best of the lessons that must be learnt from the American experience while adapting them to the United Kingdom's specific institutions.

It seems to me that many practitioners in the law will be prepared to take on conditional fee litigation in the types of cases where the odds of success are roughly 50:50. It seems to me that they should not take up cases where the odds are significantly less than that, because that tends to lead to the vexatious litigation that takes place extensively in the United States.

However, there are an awful lot of people who, if they are told by their lawyers that they have a 50:50 chance of winning, simply cannot afford to take the risk of litigating. The regulations that we are discussing tackle that problem. In giving an uplift to fees rather than giving a share of damages, one avoids the excesses of the United States, where lawyers have a direct stake in the amount of damages that will be won.

The controls and caps that have been introduced, which will be introduced in detailed regulations by the Law Society and, potentially, by the Government, will avoid the abuses that have been described by the hon. Member for Brent, South (Mr. Boateng).

However, it is important that that type of litigation is widely used and available for people who at the moment feel that they have no recourse to justice. If the terms and conditions of the order are made more restrictive than they are now, they will not be used. I believe that the balance is right, and that the legislation should be passed as it is. Obviously, it should be kept under close surveillance. If further adjustments are necessary in future, so be it, but it is an excellent first attempt at what should be an important step in modernising justice in Britain.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery 10:36 pm, 15th May 1995

I should start by declaring an interest, as a practising barrister who does a certain amount of personal injury litigation in the course of my practice.

There is no reason why new systems should not be introduced which increase the availability of justice and access to justice, as the hon. Member for Elmet (Mr. Batiste) said. If that system will work on that basis, it should be welcomed. The question is, will it work and what will it replace, if anything?

As to whether it will work, the Parliamentary Secretary was kind enough to give way to me during his opening speech, but his response was an extraordinarily skittish one for a Minister speaking from the Dispatch Box. The usual purpose of asking questions of Ministers in the early stages of a debate is so that the debate can be informed. The Parliamentary Secretary deliberately chose not to inform the debate.

Mr. John M. Taylor:

rose

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

I will give way in a moment.

The Minister deliberately chose not to inform the debate during his opening speech in such a way that his answer could be considered during other speeches in the debate. He told us that he would inform the debate of the answer to my question when he came to reply to the debate—if that happens.

I will give way to the Minister in a moment, but I would ask him to tell us what the uptake has been in Scotland. I suggest to him that the uptake in Scotland has been disappointing. Conditional fee arrangements have hardly been used in civil litigation in Scotland. It is incumbent on the Minister to tell the House what the Lord Chancellor's Department has done to try to ensure that the measures are not simply a paper tiger, as they are in Scotland, but bring more people into the courts with their claims.

Now I will give way to the Minister, if he will answer the question.

Mr. Taylor:

I invited the hon. and learned Gentleman to give way to me a moment ago because I did not want to leave him with the impression that I had sidestepped his question, at the time when he posed it, out of any disrespect for the House or any unwillingness to answer his question. From time to time, there is a place in the House for candour. I did not answer the question at the time because I did not know the answer. I have no statistics in front of me, but I do not think that the hon. and learned Gentleman put his question in a statistical form and I will not reply in a statistical idiom.

I understand, upon advice, that the Scottish experience has been that the take-up of what I think is called the speculative fee system in Scotland has been fairly limited. It has not been overwhelming or encouraging—those involved have not been run over by the weight of the business. But I also say in precisely the same spirit—again, not statistically, but in good faith to the hon. and learned Gentleman—that there is quite a body of anecdotal evidence that there is a willingness in England and Wales to take up the scheme with some enthusiasm. As the hon. Member for Brent, South (Mr. Boateng) asked, am I—the Minister—and the Lord Chancellor's Department prepared to keep matters under review? We certainly are—but we have got to give the scheme a try.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

I am grateful to the Parliamentary Secretary for his candour. But it seems extraordinary that the Government have brought forward an order and regulations for conditional fee agreements without inquiring fully into the way in which the system works in Scotland and making adjustments to the English and Welsh situation to take into account Scottish experience.

The position is even more dramatic than the Parliamentary Secretary's anecdotal answer suggested. In Scotland, speculative fee agreements are hardly used at all. One could probably count up the number of such agreements that there have been since they were introduced on the fingers of two people's hands.

Photo of Edward Garnier Edward Garnier , Harborough

Will the hon. and learned Gentleman give way?

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

I shall give way to the hon. and learned Gentleman in a moment. It is a pleasure to see him present. He is to be congratulated on having recently been admitted to silk. The hon. and learned Gentleman is an expert—indeed, a foremost expert, as has recently been confirmed—in the law of defamation and specialises in that sphere of practice.

One matter which concerns many is that the conditional fee arrangements do not apply to defamation actions of any sort. Legal aid is not available for defamation cases. Many people of modest means find it impossible to bring proceedings, particularly against big guns such as newspapers, when they have been seriously defamed, because legal aid is not available and they cannot find a generous backer for their claim. Does the hon. and learned Gentleman agree that that is an aspect of the regulations which needs to be reconsidered?

Photo of Edward Garnier Edward Garnier , Harborough

I am grateful to the hon. and learned Gentleman for his kind words, but the question that I want to ask him does not relate to defamation. He has clearly studied the Scottish position with some care. Can he tell the House, from his studies, what is the position where a lawyer acting for a contingency fee plaintiff is unsuccessful? What happens to the successful defendant? From whom does he recover his costs? Does he recover his costs from the effectively maintained plaintiff, from the maintaining lawyer or not at all?

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

My understanding of the situation in Scotland is that he recovers his costs, and that where he recovers them from depends on the nature of the agreement entered into.

I must reflect a little disappointment that the hon. and learned Gentleman did not answer the question about defamation with which I tempted him.

The agreements referred to in the Conditional Fee Agreements Regulations 1995 are both complex and far from what I think was originally in mind when the Lord Chancellor introduced the proposals which eventually formed the Courts and Legal Services Act 1990. The agreements that will be permitted will not be conditional on the case being successful, either by judgment or by settlement out of court. The agreements include a situation in which the litigant will have to pay certain fees to his or her lawyer in any event. That is clear from regulation 3(c), which provides for payment upon partial failure of the specified circumstances…irrespective of the specified circumstances…and upon termination of the agreement for any reason. That will put rather unequal power in the hands of lawyers entering into conditional fee agreements because litigants who can find no assistance elsewhere might well find their lawyers placing agreements in front of them that will require payment of the lawyers' costs in part in any event. One does not have equal bargaining power.

I do not know what consultations the Lord Chancellor's Department has had with the Law Society and the General Council of the Bar on these matters, but it is extremely important that the enthusiasm of the Consumers Association should be tempered by such considerations. It is vital that such agreements should be entered into at arm's length, under strict controls and in fair circumstances.

Before I give way to the Minister, I will ask him another question. Can he confirm that, if a plaintiff enters into a conditional fee agreement—for example, in respect of a medical negligence action which may involve enormously expensive expert witnesses, and these days good experts attending court tend to ask for at least £1,000 a day—and that plaintiff wins his case, he will be able to recover all his costs, including the uplift from the other side? If that is the case, and it seems right from the plaintiff's viewpoint that that should be the position, how does the Minister justify to the defendant's side that they may be paying double the costs in such an action? What is the solution to that conundrum?

Mr. John M. Taylor:

I shall need to reflect on the last point that the hon. and learned Gentleman put to me. On the first point, about the mismatch in bargaining between the lawyer and the client, the hon. and learned Gentleman needs no law lectures from me. His attainment as a lawyer is probably well beyond mine, but he will be familiar with those relationships known as uberrimae fidei, or of the utmost good faith, in which the doctrine of undue influence comes into play. The hon. and learned Gentleman will know from his learned studies that, if a solicitor exploits the relative weakness of his client in those circumstances, the outturn will be determined contra preferentem, or against the person advantaged, or in other words against the solicitor.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

The hon. Gentleman, from his experience as a high street solicitor—[Interruption.] I believe that the address of his office was the high street in Walsall. He will know from his considerable experience and expertise—and it happens to all Members of Parliament—that allegations of undue influence are extremely difficult to prove, although many of us come across them on a regular basis in respect of probate matters which are brought to our constituency surgeries.

The doctrine of uberrimae fidei will not give a great deal of comfort to ordinary litigants. In the fastnesses of Montgomeryshire, people think of nothing but uberrimae fidei as they drink their tea and enjoy the Barra Bridd.

I also suggest to the Minister that there is real concern that proceedings before the civil courts are to be consigned to conditional fee arrangements as civil legal aid is allowed to wither on the vine. Will he give a commitment on the part of the Government that such agreements are not intended to deal with everyday run-of-the-mill cases? Those arrangements are intended to deal with the residue of cases where legal aid may not be available or where the litigant may be just above the legal aid means test limit and is thus deprived of that remedy unless some other mechanism is found.

I turn to proceedings before the European Commission of Human Rights and the European Court of Human Rights. The Minister will know that that is a very specialised and difficult field of practice. It is also a potentially very expensive field of practice because one pays the price for the expertise that one receives. Very few lawyers in this country—I doubt whether there are any in the House—can claim to be expert in those matters, other than possibly the Attorney-General, whose services are not available to the ordinary litigant. I believe that the Attorney-General and the Solicitor-General have appeared before the European Court of Human Rights from time to time.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

And lost occasionally, as the hon. Gentleman—who cannot wait to have a go at the lawyers in his usual fashion—says from a Sedentary position.

It seems to me that the best and soundest route politically to the European Court of Human Rights is through legal aid rather than a conditional fee arrangement. There is a real risk that conditional fee arrangements will prove a very unsatisfactory way of dealing with such complex matters. Surely our society should be prepared to extend legal aid to those very few cases which make their way to the European Commission and to the even fewer which make their way to the European Court.

In conclusion, I wish to address the types of lawyers—particularly the types of solicitors—who will take on those arrangements. There are some excellent solicitors, some very bad solicitors and a great mass of competent solicitors in the middle. All those who have practised at the Bar over the years will know of the existence of what one might loosely call the "dodgy solicitor".

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

Does the hon. Gentleman wish me to give way or will he withdraw that remark, which I understand was directed at me?

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. I did not hear the remark as I was speaking to the Clerk at the time. I do not know what the hon. Member for Plymouth, Sutton (Mr. Streeter) is alleged to have said.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

I will not pursue the matter, Mr. Deputy Speaker.

There is a real fear that dodgy solicitors, and perhaps occasionally the odd dodgy barrister, may be more prepared than others to take on this type of agreement, and there is thus a risk that lawyers of lesser quality will build practices in this area. I ask the Minister to assure the House that the issue has been or will be discussed with the Law Society as well as the General Council of the Bar.

Despite the criticism which is sometimes very justifiably levelled at lawyers, we are quite proud of the quality of the legal system in this country. The American lawyers who came in droves to advise us about the then Courts and Legal Services Bill which was before Parliament strongly recommended against conditional fee arrangements. Will the Minister give an assurance that the quality issue will be addressed so that real scrutiny can take place and we may ensure that, when the agreements are used, they are used properly?

Photo of Mr David Harris Mr David Harris , St Ives 10:53 pm, 15th May 1995

As a layman, I hesitate to rush in where my honourable and learned colleagues fear to tread. However, I share some of the apprehensions that have been expressed during the debate. My hon. Friend the Member for Elmet (Mr. Batiste) put it well when he said that no hon. Member wishes to rush down the American road in this area. We do not want to see litigation multiply at an alarming rate on the basis that, if a lawyer does not win the case, he or she will not receive a fee. As constituency Members—that is how I approach the issue—we have all come across constituents who believe that they have a right to justice, that they must therefore be supported, usually through legal aid or some other means, and who want to take their case to the ultimate body, which normally means the European Court of Human Rights or the European Court of Justice. They do not know the distinction between the two.

This is my fear about the order. We may end up with litigation which will bog down our courts and buoy up people's expectation that they will win, when they probably will not. We must guard against that danger. As the hon. and learned Member for Montgomery (Mr. Carlile) fairly said however, some people have an absolute right, as we would all agree, to pursue their case, but for one reason or another they cannot do so. That is the dilemma facing the House.

I am minded to vote for the order because the Government have approached it with due caution and have probably struck the right balance in a difficult situation, but I should hate the outcome of the debate to be that the House encourages people to go to a lawyer, saying that perhaps there are dodgy solicitors and barristers—I would not know about these matters—who will take up their case and fight it to the ultimate. As the hon. and learned Gentleman warned, however, there may be a downside and those people may have to pick up part of the bill. We must be careful about that.

I shall vote for the order, but I do so with some trepidation because I do not want us to go down the American road, which has led to increasing litigation, with everyone feeling that they have a right to go to the courts at someone else's expense, although it might be at their own expense. I do not want that to happen. I shall vote for the Government's proposals, but on the basis that real dangers exist in pursuing the American example.

Photo of Austin Mitchell Austin Mitchell , Great Grimsby 10:57 pm, 15th May 1995

I speak as a non-lawyer who takes a close interest in these issues. The danger with all legal service matters, particularly here, is that policy and legal services will be formulated exclusively by lawyers, who have a vested interest in maintaining their income. The voice of the consumer—the people—is never heard. That domination by lawyers is damaging.

Admittedly, tonight many lawyers have spent most of their time criticising dodgy lawyers—they should know their own trade. Lawyers always safeguard themselves against each other, but never take account of people's interests, which should be dominant when we approach this important issue.

Tonight, we are expanding the range of available legal services in a way that does not cost much and that will introduce an element of competition to serve the people. In some respects, I am qualified to speak because I have a history in the argument. This debate is like a class reunion of those who attended the debate on the Courts and Legal Services Act 1990. Five years on, the class is as old and as repellent as ever, but it brings together the arguments. The order results from that Act.

When some of us argued for contingency fees on the American pattern, the Lord Chancellor proposed this canny Scottish idea. He said that it would be an alternative to the full flowering of contingency fees and that we should build on the Scottish precedent. I am happy to go down that road. The fact that we first took that road in 1990 but only now are considering the order shows the slowness of change. What the hell has been going on? Why has it taken so long? I can imagine all the grudging discussions and the acquiesence in getting these measures past the judges, but this incredible series of delays shows how difficult it will be to bring the full flowering of legal services to the people.

I argued for contingency fees. When I visited the United States to lecture for the English Speaking Union, I was impressed by the effectiveness of contingency fees in the hands of crusading lawyers. I know that they are much criticised as ambulance chasing but I saw, particularly in the southern states, crusading lawyers who were prepared to push cases at enormous risk and expenditure to themselves, on the basis of contingency fees. Without those fees, the cases would not have been pursued. We need similar endeavour in this country, because that would bring legal services to the people in a way that nothing else can.

We will never return to the days of wide-ranging legal aid services of a few years ago. The Lord Chancellor began brilliantly—and I am still a strong supporter of his—but increasingly he is becoming Treasury-driven. That means meanness towards legal aid. We must accept as a fact of life that legal aid provision will decrease. Legal aid can never work as a full and adequate form of funding as long as it is drained off into the bottomless pit of private practice. As long as we support private practice, it will be expensive to provide legal services to the people. I hope that Labour will spend more on legal aid and will commit itself to wider provision. However, even Labour will never attain the full range of legal services that would obviate the need for some kind of additional service

Legal aid will never be adequate, so we need measures to defend the causes, interests and concerns of the people. The legal system is pricing itself out of the market. It will never be adequate until we have an employed legal service—a public defender service for criminal matters and an employed legal service at law centres for civil matters. I would like law centres to participate in conditional fee arrangements.

Until we have full provision of legal services, these measures are a beneficial step towards the American system. We have not yet tackled the costs problem. If we are going down the American path, I see no reason for not pursuing the same path in respect of costs. Why should they be allocated against the losing side? A sensible compromise has been reached—to allow a case to go forward without the risk of costs—with which I am happy.

I am happy with the range of uplift, because, since there is a range of cases, a degree of risk and a range of possibilities, it is sensible that fees should approximate to that gradation of risks. I should like all cases to be pursued. I do not see why only those with a 50:50 chance of success should be considered because the boundaries widen all the time. Until we extend those boundaries by taking more risks, we shall never know what cases will be successful or not. Why stop at 50:50? Why not include 60:40 or 70:30 cases? All such cases need pursuing.

I like the word "uplift" in respect of lawyers' fees. The next time that I meet members of the Law Society I shall ask them specially about their uplift. It makes me think of the Church of England, which is a very uplifting institution. The Law Society will clearly become a much more uplifting institution under this new system. It is fair that the uplift is gradated as the regulations provide. The uplift has to be agreed by the client and, indeed, it is subject to an appeal—ultimately, effectively, by the client.

I am worried, however, by the telling point made by the hon. and learned Member for Montgomery (Mr. Carlile). When I consider such matters, my test is, "How will it work in Grimsby?" When people want to pursue a case against a hospital, a medical practice or whatever, they shop around among solicitors. If there is provision for the charging of fees in such cases and if there has to be an agreement, not only on the level of uplift but on what fees are charged, a conspiracy—a ring of lawyers—could develop. Solicitors could say, "Let's charge them this. Let's charge them that. Let's not take any case below a certain level of uplift." That is the danger.

How will the provisions work in a town such as Grimsby? In such a scenario, the less power given to solicitors to increase the uplift and the charges to the client, the better. We must have and encourage full and free access for the people of Grimsby to the legal services they need to defend themselves against powerful major institutions. The more the system becomes one of haggling and quibbling, the greater the potential of a conspiracy against the public and the people of Grimsby.

Photo of Mr Michael Stephen Mr Michael Stephen , Shoreham

Does the hon. Gentleman accept that he does an injustice to the solicitors of Grimsby? Does he accept that competition between solicitors is very fierce indeed and that, in fact, it is driving charges to the consumer down almost to the point at which some legal practices are becoming non-viable?

Photo of Austin Mitchell Austin Mitchell , Great Grimsby

There is a conspiracy against people in many respects. There was clearly a conspiracy on fees for conveyancing until it was broken by ending the conveyancing monopoly and introducing fair competition. As long as lawyers have a monopoly, there is danger of a conspiracy. I might be exaggerating, but I do not want to give them any leverage that might enable them to conspire against the people.

In a big city, there is more competition and solicitors might be prepared to stand up and say that they are willing to take a risk, but I do not want the people of Grimsby to have to go to Leeds or Sheffield for legal advice because only there can they find an independent, determined solicitor who will take on the system and exact less demanding terms from them than a local conspiracy of solicitors. Small towns lead to conspiracy. I am afraid that that is true of so many professional services and I do not want to give the legal system any cause to follow suit. The hon. and learned Member for Montgomery was quite right to raise that point.

The system will bring a better legal service to ordinary people than legal aid. Legal aid is, in any case, contracting. It is becoming less adequate and it often tends to be the sort of provision which has fallen off the back of the practice. I am perfectly happy to accept 100 per cent. uplift, if it would mean that cases were pursued which would not otherwise be taken on. That is the important point.

Photo of Austin Mitchell Austin Mitchell , Great Grimsby

No. I am, believe it or not, grinding to a conclusion.

The hon. and learned Member for Montgomery said that the process was little used in Scotland. Scotland does not have a system that provides for costs like the insurance system in this country. In addition, the system will be used increasingly as the boundaries of legal aid contract. The system will be an attractive alternative and I am happy to support it.

With the right degree of muscle, my hon. Friend the Member for Brent, South (Mr. Boateng) said that we would wait for the Minister's reply. I will not anticipate his reply and I will support the measure whatever the Minister says because it is a step on the way to solving the desperate need to bring more effective legal services to the people of this country.

I do not want the measure to be unduly restrictive, and I am worried about the restrictions that it contains. I regard it not as the end, but as the beginning. It is only a step on the way, but it will allow people to advance cases that would not otherwise be taken up. It is a step on the way to a paid legal service which will reach the parts that conditional fees cannot reach. I still want to move down that track. There is still a need to adopt the full American system of contingency fees where they take a slice of the winnings. Why not do that if it brings legal services to the people?

On the basis that the proposal is an advance and something that can be built on, improved, expanded and developed, we should support it.

Mr. John M. Taylor:

If there is a Division tonight, it will be interesting to see whether the Labour party fields one Member in each Lobby and, if so, where the Lib-Lab accrual will take place.

On a more serious note, I congratulate my hon. Friend the Member for Elmet (Mr. Batiste), who summed matters up so neatly and eloquently that I shall take Hansard tomorrow to read his in-a-nutshell treatment of what the Government are trying to do.

The hon. and learned Member for Montgomery (Mr. Carlile) extended to me the courtesy of endeavouring to deal with some of his questions in interventions during the debate. He also asked me to reassure the House that conditional fees are not intended to supplant legal aid and I am very pleased to do that on behalf of the Government: They are not intended to replace legal aid in any way. They are intended to complement legal aid, to provide an extra choice to the consumer, a greater versatility and a variety of options to people who find it hard, difficult and expensive to go to law.

With regard to the point made by the hon. and learned Member for Montgomery about whether clients would be advised fairly in those circumstances, I draw his attention to the narrow point, which is squarely met however, by regulation 4(2)(a) of the regulations, which states that one of the things that the client must be advised on is whether he or she might be entitled to legal aid in respect of the proceedings". That is, as it were, built into the script.

The hon. and learned Member for Montgomery told us of his experience of American lawyers coming to this country and advising against contingency fees in 1990. He is right. American lawyers advised against contingency fees where the reward to the lawyer is based on the damages. In advancing conditional fees, we are promoting a scheme where the reward to the lawyer is proportionate to the fee agreed with the client or awarded against the other side by the court.

The hon. Member for Brent, South (Mr. Boateng) quite rightly deployed arguments in favour of the protection of the client. While waiting to reply to this debate, I considered whether I should answer his questions by reading a substantial passage from the longer speech that I had thought of using tonight. On reflection, I think that the regulations are far more specific than my text, and I therefore commend to the hon. Gentleman regulations 3 and 4, which set out definitively the protection of a client who is entering into an agreement.

At the risk of saying this twice, I advise the hon. Member for Brent, South and the House of the long-standing doctrine of undue influence, whereby in cases where one party's solicitor is in a greatly advantageous position against the client, the rules of interpretation favour the weaker party, as they should. I have said that we will keep the matters under review.

I was requested to comment on the insurance arrangements. The Lord Chancellor's Department has discussed the insurance scheme with the Law Society, which has made it clear that it is willing to provide details of the scheme to anyone who is interested in it.

My hon. and good Friend the Member for St. Ives (Mr. Harris) usefully made the distinction between the European Court of Human Rights and the European Court of Justice—a distinction that is often overlooked. The different roles, constitutions and cultures of the courts are not widely known.

My hon. Friend also referred to the "American road" down which he feared we were going, and that qualified his welcome for the measure. I understand that, and I thought that he spoke fairly, but the American example is of lawyers' rewards that are geared to damages. We eschew that, and are interested in lawyers' rewards geared to the original base fee agreed, or to the costs awarded in the case by the court.

The hon. Member for Great Grimsby (Mr. Mitchell) is a member of the class of 1990, as I am, and he has a record in these subjects as long as your arm. He possesses creditable form in the issue, and always enlivens these occasions. I am glad that he felt able to support the measures, because in the name of fair play he has been one of the agents of reform. He says that reform has gone too slowly, and that it has taken since 1990 to get to where we are tonight. I understand his taking that view, because he was never content with the pace of progress.

I find myself criticised in some quarters for haste, and in some other quarters for leaden-footedness. I cannot win, which probably means that I will not get a fee. I would like to make secure the order and the regulations tonight.

Question put and agreed to.

Resolved,That the draft Conditional Fee Agreements Order 1995, which was laid before this House on 20th April, be approved.

Resolved,That the draft Conditional Fee Agreements Regulations 1995, which were laid before this House on 20th April, be approved.—[Mr. John M. Taylor]